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Ad spend on TikTok year-over-year has been growing, but that growth has cooled since a potential U.S. ban was announced in March.
Meanwhile, the platform’s user growth, especially among younger people, is flagging, according to data shared by five sources.
TikTok’s ad spend in March—the month the potential ban was announced—was up 19% year-over-year, according to MediaRadar. In the months following the announcement, that growth slightly cooled, with ad spend increasing 11% YoY and 6% YoY in April and May, respectively.
From January through May 2024, ad spend on the platform exceeded $1.5 billion, an 11% YoY increase from the nearly $1.4 billion spent during the same period in 2023.
A separate study found that nine out of 20 advertising categories saw increases in month-over-month ad spend in April 2024, according to market intelligence firm Sensor Tower.
Consumer services, which include companies like carpet cleaner Stanley Steemer and online printing service Vistaprint, had the largest increase in U.S. ad spend, up 115%, followed by jobs and education at 20%, financial services at 17% and both real estate and software at 16%.
The average daily spend on TikTok dropped by only 2% month-over-month in April 2024, per Sensor Tower.
However, four of the top 10 advertisers on TikTok reduced their spend in April compared to the previous month. That included Target (which decreased by 30% MoM), DoorDash (down 25%), Bayer (20%) and Procter & Gamble (10%).
Still, advertisers find value in TikTok.
“Until all users are gone or they’re forced to go because of the ban, there’s too much attention to ignore TikTok,” a creative agency executive told ADWEEK.
Shifting to a more performance-centric mindset
Since the potential ban was announced, some brands have shifted their focus on TikTok from upper-funnel objectives, like brand awareness, to more performance-driven return on investment goals to maximize their ad spend, according to the first agency executive.
“We’re seeing ad spend decelerate a bit YoY,” the first agency executive said. “That’s because the ban triggered more of a performance-centric mindset, and TikTok stands weaker in performance compared to Meta.”
This agency’s ad spend grew between 20% and 25% in the first quarter of 2024, dropping to about 18% YoY in the second quarter. “It’s been more resilient than you’d think,” they said.
At this agency, TikTok’s CPMs (cost per thousand impressions) for upper-funnel metrics were up by 15% year-to-date.
According to Obele Brown-West Hinsley, president of data intelligence platform Tracer, “Advertisers, as well as TikTok users, are committed.”
Looking at CPMs over the months, Tracer saw a 7% increase in March compared with February, which continued steadily through April and May, indicating growing advertiser interest and competition driving up the prices, according to Tracer.
While many platforms experienced CPM declines from May 2023 to 2024, TikTok instead saw a significant 19% YoY increase.
Additionally, user engagement on TikTok grew, with a 27% increase in click-through rates in April compared with March, per Tracer.
TikTok loses some luster in younger people
For the first time, TikTok, which boasts 170 million users in the U.S., has seen its user growth stagnate and is experiencing a notable decline in younger people.
According to YouGov, the percentage of weekly TikTok users aged 18 through 24 has fallen from 35% in 2022 to 25% in 2024. The percentage of users aged 35 through 44, meanwhile, has risen from 16% in 2022 to 19% in 2024.
During a congressional hearing in January, TikTok CEO Shou Zi Chew said the average age of a TikTok user in the U.S. is now over 30.
Daily time spent on TikTok has also seen a slight decline. According to eMarketer, average daily use dropped by 1.2% in 2024, decreasing from 52 minutes to 51 minutes.
“Overzealous users, likely young Generation Z, are spending less time on the platform than they would have 12 to 24 months ago,” said Oscar Orozco, senior forecasting analyst at eMarketer. “[And] news about a potential ban is also contributing to these declines.”
Paul Hiebert contributed to the reporting.
